The real average of the DOW stocks is about $250.

[Prosper]

The number published now is called the “Dow Jones Industrial Average”. Right now it is about 27,000 which is about 100 times the real numerical average of the stocks used to calculate the “DOW Jones Industrial Average. DOW uses a computed multiplier times the real average to computer the advertised “DOW” number. Does anybody know the significant information hidden in the DOW number, or how it is calculated. I think it is misleading to the General Public who probably thinks the 27,000 figure is in dollars. I haven’t heard any stories about capitalizing on the DOW. I think it is artificially weighted to sustain activity on the market.No matter what the explanation is can the DOW be a benefit to traders?

[Mosby]

1. The djia is only 30 companies

A better snapshot of the markets is the s&p 500.

[brush]

4. What I'd like to know is if the average buy-and-hold or mutual...

fund investor has actually made anything substantial since trump got in since the market has been up and down so many times in the trading range of 23,000 to 27,000. I mean with his tariff foolishness and other missteps that roil the market, how do you make any money when it's up one day and down the next?

Buy and sell traders who do it for a living can but the average person working at their job just doesn't have time to know when to buy and sell.

[onenote]

6. While it's been relatively flat as of late

My equity position (combination of mutual fund and buy and hold is up around 20 percent since January 2017

[ooky]

8. It would be interesting to see how that looks from Jan. 2018

since the first big market drop following the 2016 election wasn't until early Feb. 2018. All of 2017 was a straight rise for stocks, over 25% for 2017 Dow stocks.

[empedocles]

2. Traders us the S&P 500 and multiple other sources.

The Dow is popularly followed by many others.

[drray23]

3. Nobody thinks its dollars.

It's just an index to gauge the market performance. Like the Nasdaq for tech stocks.

[Prosper]

5. Does it have any meaning?

The DOW number either has units or as they same it is a multiplier that cancels units out presenting a ratio. But all that is after the trades are made making the DOW look like a review of a trend. I am thinking it has no significant information other than cheering trading in expensive stocks.

All kinds of cheering and confetti and parades when the DOW registers large numbers but the DOW multiplier is the boost that makes the DOW the celebrated index. I believe that when the DOW goes up a thousand S&P goes up a hundred. That makes me think the DOW is hype.

[former9thward]

7. No one complained about the DOW when it went up during the Obama years.

So no one should complain now. The Dow is made up of the stocks of 30 companies. Each one of these companies is supposed to be the main representative its business sector. The Dow is the sum of a rough average of the 30 companies. The companies are weighted by their market capitalization. The S&P 500 is an average of the 500 largest public companies.

If you want to ignore the Dow that is your business. But don't complain when the media reports it. In short reports on the market they don't have time to give every financial statistic which most people don't understand or don't care about anyway. Actual investors and traders have endless financial information available to them on the internet.

[muriel_volestrangler]

9. No, the Dow is not weighted by capitalization

https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average

A list of the component weights: http://www.indexarb.com/indexComponentWtsDJ.html

And US stocks by capitalization: https://uk.tradingview.com/markets/stocks-usa/market-movers-large-cap/

Boeing is over 9.5% of the index; then United Health, and Home Depot. Apple only comes 4th at 5.5%. But Apple has a market cap over 4 times that of Boeing.

It is a very odd index.

[discntnt_irny_srcsm]

10. The DJIA

...the sum of the prices/share of the 30 components divided by 0.1474.
https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average#Components

Simply put, the DJIA is sum of the selling price per share of the 30 component companies multiplied by about 6.8.